Acceptance of debt at a later date couldn’t change the date of default; plea u/s 9 was to be rejected

Case Details: SLB Welfare Association v. PSA IMPEX (P.) Ltd. - [2023] 146 taxmann.com 93 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson, Dr Alok Srivastava & Barun Mitra, Technical Member
  • Abhijeet Sinha, Shantanu Singh, Ravi Sehgal, Aditya Shukla & Ms Divya Narayanan, Advs. for the Appellant.
  • Saurabh Jain, Abhishek Anand, Nipun Gautam, Pathik Chaudhury, Advs., Gaurav Mitra, CS, Gaurav Joshi, Atul Bhatia, Advs. & Prabhjot Ranjan Singh, RP for the Respondent.

Facts of the Case

In the instant case, the corporate debtor launched a housing project which was to be completed within a period of 36 months. Since, there was a delay in the completion of the project, homebuyers filed a complaint before the Real Estate Regulatory Authority (RERA) under Real Estate (Regulation and Development) Act, 2016.

Thereafter, RERA by its order handed over the said project site to the appellant – SLB for completion of the remaining work. Meanwhile, the operational creditor filed an application before the Adjudicating Authority (NCLT) u/s 9 of the IBC demanding the due amount along with date of default as 31.03.2020.

The National Company Law Tribunal (NCLT) dismissed that application holding that it was hit by section 10A of the IBC. However, the operational creditor within a week from the withdrawal of application issued a notice u/s section 8 to the corporate debtor demanding unpaid operational debt and on basis of an alleged acknowledgement letter given by the corporate debtor dated 03.06.2021 filed an application u/s 9 of the IBC.

The NCLT by the impugned order admitted the said application. Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

NCLAT Held

The NCLAT observed that when the date of default given by the operational creditor in the section 9 application was 31.03.2020, the mere fact that acknowledgement had been given by the corporate debtor on 03.06.2021 accepting debt, could not change the date of default.

The NCLAT held that date of acknowledgement and the date of default were two different events that were not dependent on the acknowledgement of debt. Hence, an application filed u/s 9 of the IBC was liable to be rejected being hit by section 10A and the impugned order passed by the Adjudicating Authority was to be set aside.

List of Cases Reviewed

• • Rudra Buildwell Constructions (P.) Ltd. v. PSA Impex (P.) Ltd. [2023] 146 taxmann.com 92 (NCLT – New Delhi)
  • Rudra Buildwell Constructions (P.) Ltd. v. PSA Impex (P.) Ltd. [2023] 146 taxmann.com 91 (NCLT – New Delhi) (para 21) reserved [See Annex].